-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HGM8qtsqbEKyOSfThvAMy7H1g/38vgIycflN2hDKMfoFt4CTPkBykdJRcjHESuf/ DcE/3vhNitL9DiB2I34TYA== 0001034588-98-000021.txt : 19981027 0001034588-98-000021.hdr.sgml : 19981027 ACCESSION NUMBER: 0001034588-98-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981026 ITEM INFORMATION: FILED AS OF DATE: 19981026 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HSB GROUP INC CENTRAL INDEX KEY: 0001034588 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 061475343 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13135 FILM NUMBER: 98730740 BUSINESS ADDRESS: STREET 1: ONE STATE ST STREET 2: P O BOX 5024 CITY: HARTFORD STATE: CT ZIP: 06102-5024 BUSINESS PHONE: 8607221866 MAIL ADDRESS: STREET 1: ONE STATE ST STREET 2: PO BOX 5024 CITY: HARTFORD STATE: CT ZIP: 06102 8-K 1 8-K FILING SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) - October 26, 1998 HSB Group, Inc. (Exact name of registrant as specified in its charter) Connecticut 001-13135 06-1475343 (State or other (Commission (IRS Employer jurisdiction of incorporation) File Number) Identification No.) One State Street, Hartford, Connecticut 06102-5024 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code - (860-722-1866) Item 5. Other Events On October 26, 1998, HSB Group, Inc. (the "Company") issued a press release reporting its third quarter earnings. Included herewith as Exhibit 99 is the Company's press release related to this announcement and such information is incorporated herein by reference. Item 7. Exhibits. 99. Press release dated October 26, 1998 announcing third quarter results. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HSB Group, Inc. Dated: October 26, 1998 /s/ R. Kevin Price R. Kevin Price Senior Vice President and Corporate Secretary EX-99 2 PRESS RELEASE Exhibit 99 CONTACT: James C. Rowan Jr. Office: (860) 722-5180 FOR IMMEDIATE RELEASE HSB GROUP, INC. REPORTS GAINS IN THIRD QUARTER HARTFORD, Conn., October 26, 1998 -- HSB Group, Inc. (NYSE-HSB), today reported that the third quarter net income per share on a fully diluted basis, was 72 cents. This represents an increase of 41.2 percent, compared to 51 cents per share over the third quarter of 1997. HSB Group's gross earned insurance premiums grew 40.2 percent. The expense ratio declined to 43.5 percent from 47.4 percent for the third quarter of 1997. The combined ratio -- the sum of losses and expenses as a percentage of insurance revenue -- was 87.9 percent down from 92 percent last year. HSB's Engineering Services revenues increased 63 percent over the third quarter of 1997. The operating margin was 7.6 percent. Income from investment operations was $23.4 million compared to $11.4 million in the third quarter of 1997. Year-to-date realized gains are $18.4 million. -more- "Our earnings performance confirms that we have successfully positioned HSB for profitable growth in all of our businesses," said Gordon W. Kreh, chairman of the board, president and chief executive officer. HSB Group, Inc. is a global provider of insurance products and engineering management consulting services. HSB Group is the parent company of The Hartford Steam Boiler Inspection and Insurance Company, founded in 1866 to provide loss prevention service and insurance to businesses, industries and institutions. For more information about HSB, visit its website at www.hsb.com. -more- Summary of Operations In millions, except per share amounts
Quarter Year-To-Date Ended September 30 Percent September 30 Percent 1998 1997 Change 1998 1997 Change ---- ---- ---- ---- Gross earned premium $ 212.5 $ 151.6 40.2% $ 567.8 $ 456.6 24.4% Reinsurance 113.0 30.3 278.5 95.7 ------- ------- ------- ------- Net earned premium 99.5 121.3 289.3 360.9 Claims and adjustment expenses 44.2 54.1 129.1 157.0 Policy acquisition expenses 18.0 23.5 45.3 67.5 Underwriting and inspection expenses 26.4 34.2 83.5 105.5 ------- ------- ------- ------- Insurance operating gain $ 10.9 $ 9.5 $ 31.4 $ 30.9 ------- ------- ------- ------- Loss ratio 44.4% 44.6% 44.6% 43.5% Expense ratio* 43.5% 47.4% 44.1% 47.8% Combined ratio* 87.9% 92.0% 88.7% 91.3% Engineering services revenues $ 25.3 $ 15.5 63.0% $ 67.7 $ 45.2 49.6% Engineering services expenses 23.4 14.5 62.1 42.3 ------- ------- ------- ------- Engineering services operating gain $ 1.9 $ 1.0 $ 5.6 $ 2.9 ------- ------- ------- ------- Engineering services operating margin 7.6% 6.3% 8.3% 6.5% Investment income, net of related interest expense $ 15.5 $ 9.1 69.7% $ 46.6 $ 25.8 80.9% Realized investment gains 7.9 2.3 18.4 6.2 ------- ------- ------- ------- Income from investment operations $ 23.4 $ 11.4 $ 65.0 $ 32.0 Interest expense 0.2 0.4 0.5 0.9 Gain on sale of IRI - - 39.0 - Income from continuing operations before income taxes and distributions on capital securities $ 36.0 $ 21.5 $ 140.5 $ 64.9 Income taxes 9.3 5.3 41.1 16.5 Distribution on capital securities of subsidiary trusts, net of tax 4.6 1.0 13.8 1.0 ------- ------- ------- ------- Income from continuing operations $ 22.1 $ 15.2 $ 85.6 $ 47.4 Discontinued operations: After tax gain on disposal of Radian International LLC, net of deferred loss of $6.6 million - - 30.3 - ----- ----- ------- ----- Net income $ 22.1 $ 15.2 $ 115.9 $ 47.4 ======= ======= ======= ======= Earnings per share-assuming dilution: Income from continuing operations $ 0.72 $ 0.51 41.2% $ 2.71 $ 1.56 73.7% Net income $ 0.72 $ 0.51 41.2% $ 3.57 $ 1.56 128.8% Dividends declared per common share $ 0.42 $ 0.38 $ 1.22 $ 1.16 Average common shares outstanding and common stock equivalents 35.3 29.9 35.3 30.2
*Excludes goodwill amortization related to EIG. -more- Summary of Financial Position In millions, except per share amounts
Percent September 30, 1998 December 31, 1997 Change ------------------ ----------------- ------- Assets Cash and short-term investments $ 104.2 $ 424.5 Fixed maturities, at fair value 555.9 248.4 Equity securities, at fair value 409.4 323.8 --------- --------- Cash and invested assets 1,069.5 996.7 Reinsurance assets 531.0 124.5 Insurance premiums receivable 155.1 138.0 Engineering services receivable 26.9 12.2 Fixed assets 42.8 36.4 Investment in Radian - 83.4 Other assets 219.3 149.0 --------- --------- Total assets $ 2,044.6 $ 1,540.2 32.7% ========= ========= Liabilities Unearned - insurance premiums and ceding commissions $ 473.6 $ 290.3 Claims and adjustment expenses 458.2 276.7 Total borrowings 29.5 67.5 Other liabilities 261.1 151.5 --------- --------- Total liabilities 1,222.4 786.0 Company obligated mandatorily redeemable capital securities of subsidiary Trust I holding solely junior subordinated deferrable interest debentures of the Company, net of unamortized discount 108.9 108.9 Company obligated mandatorily redeemable convertible capital securities of subsidiary Trust II holding solely junior subordinated deferrable interest debentures of the Company 300.0 300.0 Shareholders' equity 413.3 345.3 --------- --------- Total $ 2,044.6 $ 1,540.2 ========= ========= Shareholders' equity per common share $ 14.08 $ 11.75 19.8% Based on common shares outstanding of 29.4 29.4 Pro forma shareholders' equity per common share assuming conversion of Trust II capital securities and net exercise of in the money HSB stock options $ 20.33 $ 18.46 Based on pro forma common shares outstanding 35.1 35.0
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